HAWK program designed to offer savings on FHA-insured loans

When the Federal Housing Administration announced its “Blueprint for Access” in May, it said the program was designed to open up the credit box for “underserved borrowers.” Now, one of the most ballyhooed features of the FHA’s plan to help ease credit availability is not going to happen, thanks to budgetary wrangling in Congress.

One of the main features of the FHA’s Blueprint for Access was a pilot program called Homeowners Armed with Knowledge, or HAWK for short. Under the four-year HAWK pilot program, homebuyers who committed to housing counseling would qualify for tangible savings on their FHA-insured loans.

But funding for the HAWK program was not included in the Consolidated and Further Continuing Appropriations Act, 2015, which was signed by President Obama this week, therefore the program will not be moving forward for at least a year.

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Under the program, the average buyer would have saved approximately $325 a year, or almost $9,800 over the life of their loan.

“Over the last few years FHA has proposed a number of steps to better serve borrowers and lenders in an ongoing effort to expand credit access and ultimately continue moving the economy in a positive direction," said Biniam Gebre, acting FHA commissioner and assistant secretary for housing. "We are disappointed programs that could have served many families will not be permitted under the bill."

The program was announced with much fanfare in May, as part of the FHA’s plan to expand credit access for borrowers.

Under the HAWK program, homebuyers would have qualified for savings on their FHA-insured loans by completing HUD-approved housing counseling provided by independent nonprofit organizations. The FHA said that the counseling was designed to help buyers understand the rights and responsibilities of homeownership and to improve buyers’ budgeting skills and housing decisions.

The homebuyer would have been eligible to earn savings on their loan by completing housing counseling before signing a contract to purchase a home. Under the now-defunct program, if the buyer completed the counseling, they would have received a 50 basis point reduction in the upfront FHA mortgage insurance premium and a 10 basis point reduction in the annual FHA MIP.

If the buyer also chose to participate in post-closing counseling and displayed a track record of timely mortgage payments, they would have been eligible for additional benefits. Under the program, participants would receive an additional 15 basis point reduction in annual MIP after two years with no serious delinquencies.

The National Association of Realtors, the Bipartisan Policy Center and others hailed the program when it was initially announced.

“HAWK is a step in the right direction, making mortgage credit available to more qualified homebuyers,” NAR President Steve Brown said at the time. “Realtors urge FHA to quickly develop the program and make it available to homebuyers,”

Instead, the program fell victim to Congressional budgetary wrangling and HUD will have to look to other methods if it wants to open up credit to more borrowers.

"HUD is the Department of opportunity. We support millions of Americans with the housing they need to succeed and we invest in making communities economically strong and inclusive. Our mission isn't a Republican or a Democratic issue-it's an American issue," said HUD Secretary Julián Castro.

"As needs for our services have gone up in states, cities and counties across the country, HUD's resources have gone down. As we have time and time again, we’ll continue to find creative ways to have the greatest impact with the resources we have available so that we can continue expanding opportunity for all."

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Ben Lane is the Editor for HousingWire. In this role, he helps set a leading pace for news coverage spanning the issues driving the U.S. housing economy and helps guide HousingWire's overall direction. Previously, he worked for TownSquareBuzz, a hyper-local news service. He is a graduate of University of North Texas.